Statistics say that 70 percent of the poor in our country are in the rural areas, where agriculture and fisheries are the main sources of livelihood. But this is not because crops, livestock and fisheries are products that are inherently unprofitable. The rich in the countryside also mostly derive their immense wealth from these same products, but they are mainly the “middlemen,” composed of traders and processors. Indeed, one observes this inequity in farming areas throughout the country, where the most expensive houses belong to these people, often in stark contrast to the farmers’ and fishers’ humble abodes dotting the countryside. The situation suggests that the primary producers of farm and fishery products are not getting their due share of the final value of their products paid by consumers. Instead, it is the middlemen who manage to obtain a disproportionately larger slice of the value for themselves.
Interestingly, there is clear indication that Filipino farmers are worse off relative to their counterparts in other Asian countries. One gets some proof of this from cross-country data on farm-gate and wholesale prices, readily available from the database of the Food and Agriculture Organization (FAO) of the United Nations. In rice, for example, the ratio of farm-gate price to wholesale price in the Philippines has been averaging 47 percent over the past 15 years. That is, Filipino rice farmers ultimately receive less than half of the value of their product paid at wholesale. The same ratio for Thailand is 63 percent, while India has 62 percent and China, 94 percent. In short, Thai, Indian and Chinese farmers are able to obtain a far greater share of the final price of their products than Filipino farmers are able to get. Only Bangladesh and Indonesia have ratios similar to ours, suggesting that these countries have the same market inefficiencies that end up squeezing the incomes of their farmers.
Why do Filipino farmers obtain such low prices for the product of their hard work?